Finnish startup Nosto has closed a $2.8 million seed round, including debt and grants, with backing from Open Ocean Capital, SanomaVentures and a number of undisclosed angel investors. The startup is building an online marketing SaaS targeting SMEs who want to amp up the power of their online stores with minimal effort and no up front cost.
Nosto’s SaaS platform offers features designed to drive more sales to online stores, including tailored product recommendations and automated emails. The startup claims it can be implemented “in less than an hour without any risk”. The ‘no risk’ claim refers to the lack of any up front fees: Nosto’s current business model is based on taking a percentage revenue cut of any sales generated.
The SaaS platform includes the following features at present:
- personalised recommendations for shoppers, based on tracking data such as their browsing habits and purchase history in order to make tailored suggestions for repeat visitors;
- triggered personalised emails (and email recommendations) to encourage shoppers to buy more, by, for example, emailing a shopper who abandons their carts in the middle of a purchase, or who hasn’t visited the store a while;
- analytics and optimisation tools, including A/B testing to help tweak store layouts to drive more sales or compare the performance of different promotion types
Nosto is still in stealth mode, ahead of a full public launch of its product, but has been piloting the software with a group of around 50 customers in Europe. Brands on its books so far include Angry Birds, Intersport, JOY, Reima, Outnorth and Sanoma’s Huuto.
CEO Juha Valvanne told TechCrunch Nosto will be using the seed funding to finalize its platform for launching on the market, and to maximise interoperability with existing SME infrastructure — by building plugins for “10 major commerce platforms used by SME segment merchants”.
In addition, he said Nosto plans to hire an “initial international partner sales organisation” and expand its R&D team. He added that it intends to add several new services to the SaaS in future to “enable merchants to communicate their products with customers in new ways”.
Asked about competitors, he said the core difference between Nosto and other online marketing players is that it is zeroing in on the SME online store space, which he described as “the underserved long tail of the market”, rather than going after sizeable but better served enterprises.
“There are players that are building business intelligence systems and software (Neolane, IBM, Marketo, Avail..). However most of these companies are targeting the top companies and the projects are heavy implementations with a hefty price tag,” Valvanne told TechCrunch. “Nosto is targeting SME online stores, the underserved long tail of the market. We are bringing easy to implement solution with no upfront costs to the market.”
“An online store’s sales consist of Visitors x Conversion Rate x Average Order Value and we aim to increase all those three factors and in addition reduce the amount of manual work from the merchant side and increase customer satisfaction,” he added.
Early customers have seen sales improvements using Nosto’s platform, according to Valvanne. “We have lot’s of data but most of these data is not public as most of the merchants do not wish to publish their KPI metrics such as conversion rates. But for example in the Budget Sport store that is a concept from Intersport, we saw an increase of 18% in conversion rate after one month since Nosto was implemented,” he said.
“In Reima’s store (which is selling children’s outdoor clothing) we saw 50% increase in the number of products customers visit by average and spend time on the site. In Rovio’s global Angry Birds online store we have seen significant impact on average order values.”
Commenting on the seed round in statement, Monty Widenius, partner at Open Ocean Capital, described Nosto as having ”a revolutionary and easy to use concept for providing shopping recommendations for any online shop”.